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As Fiscal Cliff Looms, Medicare And Medicaid Face Uncertain Futures

By Julie Rovner, NPR News

October 26th, 2012, 8:58 AM

This story comes from our partner¬ ‚Äės Shots blog.

No matter who wins the election on Nov. 6, official Washington will have to deal with something called the “fiscal cliff” before the end of the year.

Photo by Su-Lin via Flickr

What’s coming is a perfect storm of expiring tax cuts, scheduled budget cuts, and various other spending changes scheduled to take place Jan. 1 unless Congress and President Obama (who, no matter what, will still be president until next Jan. 20) agree on a way to avert them.

As two of the largest spending items in the federal budget, the Medicare and Medicaid health programs are expected to play a role in how the deal gets done. Under the provisions of the law that created the budget deal Congress will attempt to undo, Medicare is subject to a two percent cut in provider payments, while Medicaid is exempt.

But two new studies and a proposed class action lawsuit settlement suggest a lot of dollar signs could change as lawmakers start to think about how to address the impending mess.

The first, the proposed settlement in a long-running dispute between advocates for Medicare patients and the federal government, is actually likely to increase Medicare spending, although how much remains unclear.

The suit was brought by the¬ Center for Medicare Advocacy¬†on behalf of a class of patients with chronic conditions who had been denied Medicare coverage for home care, nursing home care or other services on the grounds that the patients’ conditions were not expected to “improve” with care.

The¬ settlement,¬†assuming it is approved by the judge in the case, means that “the Medicare Benefit Policy Manual Will be revised to correct any suggestion that continued coverage is dependent on the beneficiary improving,” said the organization in a statement. The change is expected to affect as many as tens of thousands of beneficiaries with conditions ranging from multiple sclerosis to Parkinson’s to diabetes, arthritis, and heart disease.

But while it will boost spending for Medicare by preventing many of those patients from spending themselves into poverty, it could well end up saving money for Medicaid, which is jointly financed by the federal government and the states.

And a new survey from the Kaiser Family Foundation finds that after one of the fastest growing years for that program, Medicaid spending growth slowed dramatically in 2012.

Total state Medicaid spending grew by an average of two percent in fiscal 2012, “among the lowest rates of growth ever recorded,” according to the study. By contrast, spending in fiscal 2011 rose by 9.7 percent.

Part of the slowdown was due to a recovering economy, which made fewer additional people eligible for the program, the survey found. Part was also due to states imposing their own cost controls on the program, in part stemming from the end of additional temporary federal funding that came as part of the 2009 stimulus law.

And that spending could go down more ‚Äď a lot more ‚Äď if Mitt Romney is elected and implements his plan for Medicaid, according to¬ yet another study¬†out this week.

This one, commissioned by the Kaiser Family Foundation and done by researchers for the Urban Institute, looked at the potential impact of implementing the plan approved by the Republican-led House. That’s similar to the one¬ Romney is proposing.

The study found that the combination of repealing the Affordable Care Act (which calls for a major expansion of Medicaid) and limiting federal payments for Medicaid could together reduce federal Medicaid spending by $1.7 trillion from 2013 to 2022. That represents a 38 percent cut in federal funding for the program.

The study estimated a range of how many people would lose coverage, depending on how states react. The estimates, however, range from a low of 31.3 million fewer people being covered to 37.5 fewer million people being covered.

4 Responses to “As Fiscal Cliff Looms, Medicare And Medicaid Face Uncertain Futures”

  1. Patrick says:

    Fiscal cliff looms? Yet, we keep sending the same people back to Congress. The exact same people that created the fiscal cliff will never compromise and cooperate on a solution. My Congressman was a member of the freshman class of 2010. They were the tea party class. They specifically went to Congress to tear it down and completely dismantle the institution. They purposely passed extremist bills that they knew would never pass in the Senate or be signed by President Obama. Is that the definition of bi-partisan? Is that the definition of compromise? Is that the definition of cooperation? They did things to purposely ruin America’s AAA credit rating. They purposely passed the legislation to create the fiscal cliff knowing full well that they would make sure it happened so America’s credit rating would be further ruined. Yet, we send the same people back to Congress to do it all over again. How insane is that? Paul Ryan’s Congress is a backed up toilet and only a complete flush will fix things! We need to stop re-electing the same morons!

  2. Vickie Barnachea says:

    Agree with Patrick. Need to fix SGR too and how about Tort reform? All factors have to be taken into consideration to bring down health expenditures.

  3. I’m not real upset by 2% provider cuts to medicare and the end of the Bush tax cuts for everyone. I’m also happy about the major cuts to the Military budget, any time you can make that happen is a good day. Assuming that the congress will get together to cut taxes for the middle class at some point and hopefully call then “The Obama Tax Cuts” ,then all that is really needed is a temporary adjustment to what you personally claim on your W2 to keep your income from going down over the biginning of the year. In return we get a large deficit reduction which will remove the issue and silence the right wing deficit fakes. Our debt rating will probably go up which is good for Wall street and bonds. We will suffer job losses and GDP growth from the Military industrial complex but that is what is suppose to happens when you stop fighting land wars for oil. On the up side, Our oil dependency, greenhouse gas emmissions and unemployment rates are moving down nicely. Our domestic oil and gas production, manufacturing and housing numbers are moving up steadily. If we can find enough knowledgeable voters hopefully we can keep the neocons out of the Whitehouse for another 12 years. I think we should be able to reinvent the new energy economy we ceeded to Europe and China during Bush’s last great Middle East Christian oil crusade in History. The rest of the worlds economy is tanked and is in need of the US ecomony recovering and lead the way with energy technology as the next Internet business. The 90 billion Obama plowed into energy investments has created a digital grid to tie it all together.

    Obama deserves credit for the good times that are right around the corner. Don’t give the Republicans a win that allows them to claim credit for the coming recovery that was built on the stimulus. They did everything they could for the last 4 years to oppose Obama and to gum up the recovery and destroy the economy for their own political benefit. We are finally at the end of the Reagan trickle down myth cycle. If the Republicans win they will double down again. The economy will temporarily recover and reinforce their 30 year fraud that tax breaks for the rich create growth. They will reverse healthcare reform which will kill manufacturing’s resurgence and enrich the insurance and hospital companies, they will move back to an oil centric energy and foriegn policy and we will be back starting wars for oil, runaway military speninding and tax cuts for the rich. It will destroying the social safety net and the deliver the death nell to the middle class.

    Vote Obama now. We can’t afford another 8 years of Bush style sabotage.


  4. Arnold Wolf says:

    Mr. Mooney are you a recipient of welfare handouts from the Obama administration? Well you won’t be receiving money from working people much longer as taxes (increase or decrease) is spent on bankrupt companies and other totally wasteful spending sprees by a community organizer.

    There is no 2% cut in Medicare and Medicaid payments to those who save your life but is more like 27.2% cut in reimbursements to hospitals, doctors and others who keep you healthy and give you life.

    When you call your doctor because your child is dying, the phone call will go unanswered until a practical nurse tells you to give your child aspriin. There will be no more healthcare except from a few Islamists who are looking to take you and your families life for Allah.

    Get used to living in a third world country where crime and riots are rampant. There will be no more police to protect your family for the tax increases won’t be used except for waste and fraud by the Federal government and Obama’s Acorns.

    You had better hope that the government comes to its senses and goes back to John F. Kennedy, Ronald Regan and W. Bush policies which had this country fnancially secure and freedom and liberty reigned.

    You might want to move to Iran where you will have a life to live under the Mullahs.